Value Opportunity? :69% off 52 week high, 82% off 5 year high
Sunday, September 22, 2013 16:13
% of readers think this story is Fact. Add your two cents.
The stock is
Jakks Pacific, Inc, symbol JAKK.
Jakks Pacific, Inc, symbol JAKK.
Jakks
Pacific is a toy manufacturer started in 1995 with TTM revenues of 632.30M
Pacific is a toy manufacturer started in 1995 with TTM revenues of 632.30M
This post
will list some but not all of JAKK’s pros and cons so you can consider as a
potential investment needing further investigation. I purchased some shares.
will list some but not all of JAKK’s pros and cons so you can consider as a
potential investment needing further investigation. I purchased some shares.
Friday
9/13/13 JAKK closed at $4.91.
9/13/13 JAKK closed at $4.91.
I was ranking
2013 net insider activity (total 2013 net dollar value of shares purchased-sold)
as a percentage of the float value (shares in float * current price). JAKK was
in the top 10 of ~ 8,000 companies reviewed.
Most of the top ten were not investable for multiple of reasons. Now to
make it more interesting JAKK has aggressively reduced their outstanding share
count. At the end of 2008 share count was 27.93M, 2009 = 27.64M, 2010 = 27.32 ,
2011 = 25.94; the current reported share count is only 22.30M. The probability
of a stock outperforming when there is a combination of both aggressive share
count reduction and aggressive insider buying is optimistic.
2013 net insider activity (total 2013 net dollar value of shares purchased-sold)
as a percentage of the float value (shares in float * current price). JAKK was
in the top 10 of ~ 8,000 companies reviewed.
Most of the top ten were not investable for multiple of reasons. Now to
make it more interesting JAKK has aggressively reduced their outstanding share
count. At the end of 2008 share count was 27.93M, 2009 = 27.64M, 2010 = 27.32 ,
2011 = 25.94; the current reported share count is only 22.30M. The probability
of a stock outperforming when there is a combination of both aggressive share
count reduction and aggressive insider buying is optimistic.
The large
insider purchases in 2013 have been by biotech billionaire, visionary,
innovator and deal maker Patrick Shiong Soon. There is an interesting story
published in Forbes 08/30/2013: “Biotech Billionaire Takes A Beating ToyingAround With JAKKS Pacific”, Click to read
insider purchases in 2013 have been by biotech billionaire, visionary,
innovator and deal maker Patrick Shiong Soon. There is an interesting story
published in Forbes 08/30/2013: “Biotech Billionaire Takes A Beating ToyingAround With JAKKS Pacific”, Click to read
Patrick Soon
has been buying shares of JAKK during 2013 at much higher prices.
has been buying shares of JAKK during 2013 at much higher prices.
A few comments
from the Forbes article:
from the Forbes article:
Patrick Soon
“has a record of producing big winners. That’s what makes his big loser in
Jakks Pacific so interesting. Soon is down more than 50% on his JAKK
investment. He owns more than four million shares at an average cost of $11.04,
according to SEC Filings”. Soon added to his initial stake in July just before
the stock plunged. Then he added more in
the $7 area, taking his total stake to 25% of the company.”
“has a record of producing big winners. That’s what makes his big loser in
Jakks Pacific so interesting. Soon is down more than 50% on his JAKK
investment. He owns more than four million shares at an average cost of $11.04,
according to SEC Filings”. Soon added to his initial stake in July just before
the stock plunged. Then he added more in
the $7 area, taking his total stake to 25% of the company.”
Soon creates
value, working with companies, by being a great visionary, innovator and deal maker.
Unsurprisingly, given the net worth he has amassed, he has a record of
producing big winners. That’s what makes his big loser in Jakks Pacific so
interesting.
value, working with companies, by being a great visionary, innovator and deal maker.
Unsurprisingly, given the net worth he has amassed, he has a record of
producing big winners. That’s what makes his big loser in Jakks Pacific so
interesting.
Jakks may
very well be in the process of divesting their traditional toy business and
morphing into a technology company. In
that case, we could be looking at a company that will be in the licensing
business, with a valuation multiplier twice that of a traditional toymaker.”
Source Forbes
very well be in the process of divesting their traditional toy business and
morphing into a technology company. In
that case, we could be looking at a company that will be in the licensing
business, with a valuation multiplier twice that of a traditional toymaker.”
Source Forbes
Additional
Pros:
Pros:
June 2012, Oaktree
Capital attempted a hostile takeover of JAKK. The $20 per share offer was
rejected. It would seem
management/board have many catalysts to mover the stock higher. Insider own 16.98%.
Capital attempted a hostile takeover of JAKK. The $20 per share offer was
rejected. It would seem
management/board have many catalysts to mover the stock higher. Insider own 16.98%.
Shaun Currie
posted an outstanding JAKK article August 29 on Seeking Alpha.
posted an outstanding JAKK article August 29 on Seeking Alpha.
Closely
followed value investors John Rogers and Richard Snow increased their position.
John Rogers now owns 775,191 shares. Richard Snow owns 86,635 shares. Ben
Graham investment style value investors Charles Brandes, Richard Pzena and Third Avenue
Management have positions that were unchanged in their last reported positions.
followed value investors John Rogers and Richard Snow increased their position.
John Rogers now owns 775,191 shares. Richard Snow owns 86,635 shares. Ben
Graham investment style value investors Charles Brandes, Richard Pzena and Third Avenue
Management have positions that were unchanged in their last reported positions.
JAKK stock
price on Jan 2008 = 22.39, Jan 2009 = 17.43, Jan 2010 = 10.45 Jan 2011 = 16.43,
Jan 2012 = 14.71, Jan 2013 = 12.88; the current price is 4.91. The dividend was
suspended in 2013. The historical price performance makes it a strong candidate for mean reversion. JAKK is sitting on 70M in cash or 3.19 per share.
price on Jan 2008 = 22.39, Jan 2009 = 17.43, Jan 2010 = 10.45 Jan 2011 = 16.43,
Jan 2012 = 14.71, Jan 2013 = 12.88; the current price is 4.91. The dividend was
suspended in 2013. The historical price performance makes it a strong candidate for mean reversion. JAKK is sitting on 70M in cash or 3.19 per share.
Cons:
Jakks Pacific
Inc announced their second quarter results with revenues of $106.2 million and
net loss of $46.9 million. These unexpected horrific results have attracted
multiple class action lawsuits. Another
disturbing statistics is the short position continues to be reported higher
every two weeks. 31.40% of the float is reported short.
Inc announced their second quarter results with revenues of $106.2 million and
net loss of $46.9 million. These unexpected horrific results have attracted
multiple class action lawsuits. Another
disturbing statistics is the short position continues to be reported higher
every two weeks. 31.40% of the float is reported short.
Future dilution
will be a drag on the stock price. Jakk did a convertible bond financing that
was necessary to refinance maturing debt. The convertible holders have the
option of converting to 11.4M shares at 8.75.This is about half the current shares
outstanding of 22.30M.
will be a drag on the stock price. Jakk did a convertible bond financing that
was necessary to refinance maturing debt. The convertible holders have the
option of converting to 11.4M shares at 8.75.This is about half the current shares
outstanding of 22.30M.
Concerns
about what shareholder legal issues, dilution and other off balance sheet liabilities
in contracts could be a real overlooked negative with the stock. This may
explain the larger and growing short position. So idea is speculative.
I just don’t know enough at this time.
about what shareholder legal issues, dilution and other off balance sheet liabilities
in contracts could be a real overlooked negative with the stock. This may
explain the larger and growing short position. So idea is speculative.
I just don’t know enough at this time.
Statistical
data:
data:
Market Cap:
107.62M, Enterprise Value: 134.63M
107.62M, Enterprise Value: 134.63M
Price/Sales: 0.18 , Price/Book: 0.86
Enterprise
Value/Revenue: 0.21 , Enterprise
Value/EBITDA: -4.38
Value/Revenue: 0.21 , Enterprise
Value/EBITDA: -4.38
Qtrly Revenue
Growth (yoy): -26.90%
Growth (yoy): -26.90%
Gross Profit:
197.94M , Total Cash: 69.94M
197.94M , Total Cash: 69.94M
Total Cash
Per Share: 3.19 , Book Value Per Share:
5.91
Per Share: 3.19 , Book Value Per Share:
5.91
52-Week
Change: -67.40% , 52-Week High (Sep 24,
2012): 15.44 , 52-Week Low (Sep 17,
2013): 4.82
Change: -67.40% , 52-Week High (Sep 24,
2012): 15.44 , 52-Week Low (Sep 17,
2013): 4.82
% Held by
Insiders: 16.98%, % Held by
Institutions: 89.10%
Insiders: 16.98%, % Held by
Institutions: 89.10%
Short % of
Float: 31.40%
Float: 31.40%
Source: http://shadowstock.blogspot.com/2013/09/value-opportunity-69-off-52-week-high.html
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